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Bachelor thesis

The financial and economic impact of the U.S. government shutdown of October 2013 on trade and the role of information in commodities trading

SONAR|HES-SO

    2015

102 p.

Mémoire de bachelor: Haute école de gestion de Genève, 2015

English The role of information on the markets is crucial as its purpose is to make the trade more efficient and transparent. The data are released by different sources and each market participant has to be able to sort them out and chose the ones that are more relevant for their activities. For most of the professionals, the data coming from the U.S. Government are the original and most reliable source of information. The U.S. federal shutdown of October 2013 created some fear and uncertainty in the United States but also worldwide. There was no information on the length and on the potential consequences that the closing would have on the economy. The market participants in commodities trading have been impacted by this event, as the national entities delivering data reports to the markets were closed for a period of two weeks. As a result, some categories of players active on the commodities markets were basically 'flying blind' as they did not have access to the necessary information that they usually base their trading decisions on. This report contemplates the potential impact that the closing had on the trade of crude oil and corn in October 2013. The main objective is to determine whether the markets are too dependent on the release of information coming from the Government and what this may imply in terms of risks. The analysis of the West Texas Intermediate and Brent crude oil markets established that the shutdown created some volatility on the spot markets; however, not in a significant way. Additionally, according to the findings, the futures markets of WTI have been impacted as there was less volume traded during the month of October 2013. Unfortunately, the prices of October 2013 for the futures contracts of crude oil and corn were not publicly available. As a result, only the volume traded on the futures markets were analysed. On the other hand, the corn markets did not manifest a strong impact from the U.S. Government shutdown. The spot markets showed some volatility; however, compared to other years it was not of great meaning. Throughout the interviews held for this project, many professionals from the agricultural commodities trading businesses did mention that they noticed a decrease in the global volume of contracts traded during October 2013. Nevertheless, after analysis of the amount of corn futures contracts traded, there was no evidence that there was a decrease in the numbers of commitments at this period. It may have impacted other agricultural goods but the corn markets showed no significant differences.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • Economie d'entreprise
  • hesso:hegge
License
License undefined
Identifiers
  • RERO DOC 258578
  • RERO R008353557
Persistent URL
https://sonar.ch/global/documents/314474
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